Kersey v. Kersey et al.
| Decision Date | 23 March 1915 |
| Citation | 76 W.Va. 70 |
| Court | West Virginia Supreme Court |
| Parties | Kersey v. Kersey et al. |
Trusts Enforcement in Equity Acquisition of Property.
Where one obtains the legal title to property through the influence of a relation of confidence and trust, under such circumstances that he ought not in equity and good conscience to hold and enjoy the same as against the other party to the relation, equity will impress the property with a trust in favor of the latter.
(Lynch, Judge, absent.)
Appeal from Circuit Court, Mercer County.
Suit by W. W. Kersey against J. L. Kersey and others. From decree for plaintiff, the defendant named appeals.
Affirmed.
Sanders & Crockett and Russell S. Ritz, for appellant.
French & Easley and Harold, A. Ritz, for appellee.
Robinson, President:
By this suit two brothers are in contest over the ownership of a laundry. The plaintiff says that the plant and business is his. The defendant quite as insistently says that it belongs to him. Each denies that the other has any right. Yet the record plainly enough establishes that the claim of each is so broad as not to be just, and that the chancellor did not very far miss the mark of sound equity when he rendered a judgment herein not unlike the proverbial one of Solomon.
The object of the bill is to have the defendant enjoined from interfering with the plaintiff's possession and management of the property and business and to have the plaintiff declared to be the sole owner thereof. The defendant, claiming to be the sole owner of all the property and business, was proceeding to oust the plaintiff therefrom when the suit was instituted. The court has decreed to each a particular interest. The defendant has appealed.
It is essential that we state from the record only such of the facts as show the true relation of the parties to each other, and their relation to the property involved. This will disclose the meat of the case.
W. W. Kersey, the plaintiff, and one Bentley, as partners, several years ago built up a laundry business in Bluefield. Having acquired real estate and mortgaged the same, they found it essential to the promotion of the enterprise that they turn it into an incorporated company. Of the capital stock of fifteen thousand dollars, each took shares to the amount of five thousand. The remaining stock, amounting to five thousand dollars, was to be sold to others. Three of these shares were sold to the defendant J. L. Kersey, who at that time was a justice of the peace at Bluefield. Other small amounts were placed here and there, until there remained twenty-three shares unsold in the treasury of the company. Friction arose between W. W. Kersey and Bentley. It developed into an effort on the part of each to get control of the corporation by buying sufficient additional stock, so as to oust the other from participation in the management. Discovering that Bentley was seeking to obtain control, W. W. Kersey sought the aid of his magistrate brother. Things were so managed by them through the aid of a third party that the remaining twenty-three shares as well as two of Bentley's shares passed into their control, being taken over in the name of J. L. Kersey. This gave them a majority of the stock. But it was Bentley's turn next. Pour shares of his stock as well as four shares of W. W. Kersey's stock had been pledged as collateral to a note in bank. When the note matured, Bentley brought about a sale of the collateral, so that a brother-in-law of his became the purchaser of the same. Bentley did this by keeping from W. W. Kersey the fact that the note had matured and that a sale of the collateral was pending. Prior to this, J. L. Kersey had removed from Bluefield to Hinton, where he was managing a hardware business. Again W. W. Kersey sought the advice and aid of his brother. Legal proceedings against the sale of the collateral were begun. J. L. Kersey.came to Bluefield to assist his brother in regaining control of the business. He sought to purchase shares of the stock from other parties, but did not succeed far enough to regain control for his brother as against Bentley. Soon thereafter Bentley suddenly died. Later, J. L. Kersey succeeded in getting in from Bentley's brother-in-law the eight shares of stock which he had purchased at the sale of the same as collateral. Thus, again the laundry business was in complete control of the Kersey interests. By the death of Bentley the enterprise was freed from the friction that had previously existed between those interests and the Bentley interests. The Kersey stock prevailed, a new board of directors was elected, and the remaining Bentley interests were excluded from the management.
For several months thereafter W. W. Kersey continued the business. His brother, living at Hinton, rendered only such aid as his situation afforded. That he had become the adviser of his brother toward saving the enterprise from control by the Bentley interests, and the manager of the financial affairs tending to that end, plainly appears. But it quite as clearly appears, that he had been drawn into all this out of a desire to protect his brother and save the business to the latter as against the Bentley interests. Brotherly interest, rather than attractive financial investment, brought him into the matter. He was not a laundryman. At no time was he directly connected with this laundry business.
While J. L. Kersey was regaining control of the stock, he deemed it best to take from W. W. Kersey a transfer of the stock which the latter held. He states that his reason for this was that he did not believe his brother competent to handle the financial affairs, and that in order properly to handle them, it was necessary for him to have the stock in his name. He says that his brother was leaving the stock certificates lying around where anyone could obtain them. So at the request of J. L. Kersey, his brother transferred to him forty shares, retaining only five. As the stock then stood, it was considered worthless in actual money value. Still J. L. Kersey executed his note to W.W. Kersey for a sum representing the stock. It is conceded that the understanding between the parties was that the note was not to be paid, that the stock was to be returned to W. W. Kersey if they were successful in making it valuable, and that in any event the note was to be destroyed. That J. L. Kersey held the forty shares of stock in trust for his brother can not be gainsaid. He took it over to aid the efforts into which he had been drawn for the protection of his brother, as well as to aid efforts which by reason of his having been drawn info the matter were now necessary for his own protection. In a sense he had become the partner of his brother, The primary object of that in the nature of a partnership between them was to protect W. W. Kersey from being ousted by the other interests and thus losing all efforts and money he had put in the business. Later their joint relation developed into one having for its object the saving of the efforts and money they had both put in on the former score. They were working together, for one another. The relation was one of mutual trust, confidence, and protection one not unnatural for brothers.
Though the Kerseys obtained control of the laundry plant and business, large indebtedness secured by deed of trust liens was hanging over the same. This indebtedness for a time they carried. Later, the property was allowed to go to sale under the deeds of trust. It was bought on behalf of the Kerseys, as we decide from the record, though J. L. Kersey claims that it was purchased for himself, while W. W. Kersey claims that it was purchased wholly on his behalf. It was bought at a very advantageous figure. Indeed the Kerseys planned that the sale should come their way and succeeded well in that regard. All other interests were of course foreclosed by the sale. The purchase gave them the property independent of all others, so that they might take a new start with much more hope of saving the efforts and money they had theretofore invested. The title was taken in the name of Pollock, an officer of the bank which advanced the amount necessary to pay the purchase money. In other words, the title was held by Pollock as security for the loan. Writings in this behalf attested that when the money was fully paid, Pollock was to transfer the title to J. L. Kersey. The note for the loan was given in his name. It is upon this purchase in the name of J. L. Kersey and the giving of an obligation therefor in his name, that he bases his claim as sole owner of the property.
After the purchase of the property the laundry business was continued under the direct management of W. W. Kersey as before. J. L. Kersey continued in business at Hinton. Thus matters went on from the latter part of 1911 to the early part of 1913. The relation which had grown up between the parties in regard to the laundry, continued. The correspondence between them during this time shows the same brotherly desire to aid each other in making the business a success. At no time did J. L. Kersey say anything or assume any part that would lead W. W. Kersey to think that he claimed sole ownership, or that the latter was merely in the employment of the former. The business began to be successful, and W. W. Kersey from the proceeds thereof was meeting payments on the purchase money loan.
During the year 1913 some questions arose between the parties as to their respective interests. In a letter, W. W. Kersey said to his brother: "I also think that we should come to some understanding about the business and incorporate, as the shape things are in at present, might place me in an embarassing position, should anything happen to you financially or otherwise." Clearly we see that he had reference to the fact that title to the property was held by J. L. Kersey. In reply to this, J. L. Kersey said: ...
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